AMJ Financial Blog

TAX – Calculating the Pro-Rata Rule in 5 Easy Steps

If you hold both pre-tax and after-tax money in your IRA, you’ve likely heard of the pro-rata rule.

It’s important to understand how this rule is calculated and how it can impact your retirement funds.

In simple terms, the pro-rata rule is used to determine how much of a distribution is taxable when you have a combination of both pre-tax and after-tax dollars in your account.

As you proactively plan for retirement, understanding the tax implications of your various accounts can be key to maximizing your savings. Using the pro-rata rule to help determine the tax on your distributions can give you a better idea of how much money you’ll owe Uncle Sam in retirement.

Click here for a step-by-step guide to help you calculate the pro-rata rule.

For professional assistance with proactive tax planning for your retirement accounts, contact our office at 703-466-0477.

Securities offered through Triad Advisors, Inc Member FINRA/SIPC

Advisory Services offered through AMJ Financial Wealth Management LLC

AMJ Financial Wealth Management LLC is not affiliated with Triad Advisors, Inc.

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